State tax on millionaires proposed

Friday

Mar 21, 2014 at 1:50 PM

By John O'ConnorAssociated Press

Two days after Illinois Republicans chose a multimillionaire as their candidate for governor, the powerful Chicago Democrat who controls the Illinois House proposed a tax on millionaires Thursday to fund the state's financially strapped education system.

House Speaker Michael Madigan introduced a constitutional amendment to tack a 3 percent surcharge onto incomes over $1 million, which he said would raise $1 billion a year for elementary and secondary education.

Madigan announced the idea in a state Capitol news conference just as one of the nation's most competitive governor races is heating up between Republican Bruce Rauner, a wealthy private-equity investor, and Democratic Gov. Pat Quinn, who espouse starkly contrasting visions of how to fix the lagging economy of the Democratic stronghold.

The proposal by the speaker, who doubles as state Democratic Party chairman and has controlled the House for nearly all of the last 30 years, intensifies an ongoing debate over tax policy in Illinois less than a week before Quinn delivers a budget address. The governor is expected to use the speech to lay out how he plans to deal with a temporary income-tax increase that's set to expire halfway through the year, leaving a budget hole as big as $3 billion.

"What we're doing here is calling upon people in Illinois that are well-equipped to provide support for education, which is available to everybody in the state," Madigan said.

Rauner campaign spokesman Chip Englander said Rauner is happy to pay more for schools and has given millions of dollars to education over the years, but he won't support Madigan's proposal.

"The last time they raised taxes, they hit every Illinoisan with a 67 percent increase, and they still turned around and cut funding for education," Englander said in a statement. The statement later said, "We need to take a look at our entire tax system to make Illinois more competitive and lower the tax burden on the people of Illinois."

Another Republican criticized the proposal as "a desperate attempt" to divide Illinois residents. "The timing is, I'm sure, no coincidence," said Sen. Matt Murphy of Palatine.

Madigan denied that the proposal was a shot at Rauner — as a lawyer in private practice, the tax would apply even to himself "in a good year." He argued that he has long been a supporter of education funding.

"I've been here for 44 years, and I've voted for every tax for education," Madigan said.

Quinn wouldn't express an opinion on the initiative, saying only that he would "take a look at the details." But David Yepsen, a political analyst at the Paul Simon Public Policy Institute at Southern Illinois University said he expected Democrats to be "doing lots of this sort of thing between now and November."

Quinn, who has made a political career as a populist and defender of the middle class, has increased taxes and pushed for raising the minimum wage. Rauner, who says the best way to help working people is to improve the business climate, wants to curtail government unions much like Republican Wisconsin Gov. Scott Walker did.

Quinn has repeatedly noted Rauner's wealth in public appearances, and criticized him for changing his position on the minimum wage. Rauner accuses Quinn of "class warfare."

Madigan wouldn't disclose his position on the state's temporary income tax, which would drop from 5 percent to 3.75 in January if allowed to expire, nor would he express an opinion on an initiative to get Illinois to adopt a graduated income tax.

The constitutional amendment would have to be approved by supermajorities in the House and Senate to make it to the November election ballot, where voters would decide whether to change the Illinois Constitution.

Madigan said he estimates that in 2011, 13,675 people in Illinois had adjusted gross incomes over $1 million. Income up to $1 million would be taxed at the current rate, but any income over $1 million would be subject to the 3 percent surcharge. The money would be distributed on a per-pupil basis and works out to about $550 for each student in grades K-12.

Madigan said he expects some support from Republicans.

"They ought to take a good, hard look at this and say, 'Why not let the people decide?'" he said.

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